Warsaw-based fund manager CVI has posted a first close for what it claims is the first institutional direct lending fund ever raised to focus on Central Europe.
The CVI CEE Private Debt Fund has so far raised €80 million with half the capital being committed by the European Investment Fund through its Private Credit Tailored for SMEs programme, part of the European Fund for Strategic Investments. Several family offices and institutional investors have also made commitments.
The fund has already made seven investments with two more expected shortly, which would make the fund 30 percent invested. Target markets include Poland, the Czech Republic, Slovakia, the Baltics, Romania and Hungary.
CVI has a final target of €300 million for the fund, which makes individual investments of between €2 million and €15 million.
“Central Europe offers a significant opportunity in terms of private debt, as the market is still very much underserved,” said CVI managing director Radoslav Tausinger in a statement. Banks in the region appear to have limited appetite for SME lending.
A source at the firm said a second closing was expected soon, with more Western European investors expected to come on board. The source added that investors were attracted by the potential for senior secured returns of around 10 percent, indicating there has been no yield compression in the region.
A manager of private debt funds focused on Europe since 2012, CVI has committed more than €2.3 billion to more than 600 investments.